ERGEG Workshop – Pilot Framework Guideline on ... - ceer.eu
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ERGEG Workshop – Pilot Framework
Guideline on Gas Capacity AllocationStakeholder View by Vagn Pedersen, Senior Regulatory Advisor, DONG Energy
February 2nd in Brussels.
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DONG Energy in the North West European Gas
Market
LNG
Global via
Gate
Terminal
Russia
Production
NWE
Via
Nord
Stream
DK North
Sea /
Norway / UK
Long, mid &
short term
contracts
DONG Energy's gas supply
portfolio is a combination of own
production, long supply contracts
from NWE and Russia as well as
LNG.
DONG Energy holds a diversified
portfolio of suppliers and
contracts in order to provide a
high level of security of supply.
DONG Energy gas activities
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Overall considerations
• The fundamentals:
– A sufficient, efficient and sound physical infrastructure is crucial for the gas
industry.
– All market players are dependent upon a transparent and stabile regulatory
framework as basis for sound business decisions.
– An unclear, unstable and/or unattractive regulatory framework may harm
otherwise good business cases - as well as postpone and jeopardize investment
decisions.
– Gas supplies must be physically transported over still wider distances. Gas
producers must make substantial investments to make the gas available for the
market – consequently, it is necessary for the market to show its attractiveness
for the producers by guaranteeing long-term "security of demand".
– The commitment of shippers to support infrastructure investments by long-term
capacity bookings are necessary to attract investors - the regulatory framework
must support this.
3
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The capacity situation is already improving
• DONG Energy recognizes the progress resulting from the hard work by market
players including ERGEG :
– Market area integration/cooperation. (Establishment of NCG & Gaspool;
Gaspool/Thyssengas platform, Eucabo platform etc.)
– The improved availability of transport capacity (capacity release agreements,
secondary market etc.)
– Enhanced cooperation between NRA's and between TSO's (Open Seasons -
Energinet.dk/Gasunie etc.)
– Integration of H-gas and L-gas market areas (NL)
• Many excellent initiatives have been taken in recent years – the market needs time to
absorb these changes – a little patience is required before clear results start to click-
in.
• HOWEVER : Many current national regulatory initiatives seem asyncronous
compared to EU's 3rd Package.
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Allocation of Gas Transport Capacity
Dys-functioning Market
- short term, optimization
& necessary to cover
sales plans
- mid term, not possible
to cover sales plans
-long term,not possible
to establish market
position
Well-functioning Market
- short term, optimization
- mid term,
to cover sales plans
- long term, establish
market position
Sufficient physical capacity
Insufficient physical capacity
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Considerations vis-a-vis the Framework Guideline
1. Re-allocation of existing pipeline capacity/limitation of booking periods
1. DONG Energy believe in market/sales driven mechanisms. Therefore, DONG
Energy do not support the above suggestions.
2. A number of Open Seasons have been conducted - or are in progress
3. Access to existing, primary capacity seems to be a matter of allocation.
Auctions may provoke unrealistical high transport tariffs. DONG Energy support
allocation via "Open Subscription Periods".
2. No separate transit regime
1. Without a separate regime, transit volumes have to pass each hub/virtual point
and the TSO's must make capacity reservations to also bring these volumes to
all points of the exit zone. DONG Energy suggest a more intensive use of "Flow
Commitment" and others appicable tools in order to avoid contractual
congestion caused by transit volumes.
3. Limitation of re-nomination rights
1. Limitations of re-nomination rights will limit shippers from securing the physical
delivery of gas. Furthermore, shippers will not be able to take full advantage of
short-term trading opportunities. Consequently, DONG Energy is against the
idea of limitation of the re-nomination rights
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Thank you for your attention !
Contact details :Vagn Pedersen
Senior Regulatory AdvisorRegulatory Affairs
DONG Energy+45 99 55 79 21